When to Quit Day Trading?

[Mike B 625]

Hello Fellow Traders,

After reading the email from Andrew about “When to Quit Day Trading” I wanted to offer my perspective as I am in almost the same predicament as the trader Andrew referenced. My current trading career is (1) planned live trade, 2 unplanned live trades due to not realizing I was not in simulator, and about 4- or 6-months simulator depending on if you want to count the 2 months I spent just watching charts. I am an active duty United States Marine who is about to transition from the military after 22 years of service. I originally planned on becoming a Forensic Accountant upon retiring from the military. I have acquired my bachelors in accounting, Master in Forensic Accounting, and achieved a Certification as a Certified Fraud Examiner; however, after being introduced and reading Andrew’s book I have decided to invest all my time to becoming a day trader prior to my retirement from the military in December 2019. I found myself continuously asking the same question as the trader referenced, “Is there any criteria to determine when to quit trying to learn day trading?”

I believe the answer to the Traders question is, “When you as a trader and your family no longer have the desire or ability to accept failure as a possibility.” As long as you and your family have the desire to learn, work, and sacrifice for this career than you should pursue it. During my time in the service I have been away from my wife, son, and daughter more than I have ever wanted to be. I currently work away from where my family lives. Monday through Thursday it is easy to focus on Day Trading and learning; however, due to connectivity issues in the hotel rooms, I spend at least 10 hours on the weekend watching the Mentorship webinars, classes, reviewing my journal, and developing the next week’s trading plan.  

I have found the best thing is to communicate with your family on why you are doing what you are doing and get their acceptance. My family views my time spent learning to day trade as a way that they will get to see me more in the future. They honestly have become more upset with me when I don’t put forth my full effort on the weekends to learning Day Trading, as they have bought into the fact that becoming successful in this business will allow me to spend more time with them.

I could easily retire from the Marine Corps and become a Forensic Accountant Intern; however, this career path would still keep me away from my family, so we (My Family and I) have decided that $x amount is worth risking to learn to Day Trade. If I lose that amount, then oh well it was worth it and I will move on to something else; however, if I don’t then my family and I will have a great life day trading while getting to spend more time together.

[Jason H. 56]

I've had several setbacks in my journey to becoming a full time day trader. I sim traded for 4 months, finally gained some momentum, reached a level of sim trading that was consistently profitable, made some small gains in real trades to start building thicker skin trading real money...

Then I lost my job. 

It wasn't because of trading, but it did result in me needing to empty my trading account. It's amazing how long it takes to establish something that can go away in an instant. I didn't blow up my account, but it felt the same. 

Two months of unemployment later and I was back in an office working a consulting contract for more money than before, but a lot less time. In the office by 8am. No time to trade or even watch the chat. No point maintaining a DAS or TI subscription. No point even studying or reading because I know myself enough to know I won't retain it if I don't get to practice. 

I didn't quit. To me quit means never going back. I prefer "when should I reevaluate my approach?" I think that is a question a day trader should already be asking themselves every day and every minute because that's the nature of trading. So I re-evaluated my approach. 

I knew my contract was 6 to 9 months. 6 to 9 months of no trading, so I adjusted my trading plan: 1. Find a job with enough flexibility to allow me time in the morning to trade; 2. Rebuild my trading account. 3. Re-develop my long term plan to reach full time trading.

It took 6 months but I found the new job. I started 4 weeks ago and for the last week I've been able to join the chat through the open. Right before I started my new position a pipe burst and flooded our home, so now we're dealing with that, which will definitely delay my account funding again, but I'll deal with the setback. The upside of the flood is the owner of our home wants to sell it, and offered to sell it to us. Another setback financially, but long term a good thing. 

I didn't quit. I don't want to quit. Personally for me I've decided that day trading tics all the boxes of what I want to do to earn a living. I know 90% of traders fail, and I know many of the reasons why. I think self-reflection is THE key skill a trader needs, and unfortunately I don't think many people who approach day trading appreciate that. Self-reflection counteracts self-deception and reinforces self-reliance. To me, the time to quit is when you've been honest enough with yourself to accept that you either don't really want to be a day trader, or, more likely, you fell in love with the idea of day trading and found the work too daunting. Like any career, it isn't for everyone. But if it is for you, don't ask yourself when you should quit, ask instead "what do I need to change to succeed?"

 

[Mike B 625]

Great post, I really like your statement at the end, "what do I need to change to succeed?" I going to add this to my Trade Journal routine as the last thing to do before closing it out. 

[Skye 28]

Mike B, it's been a year! What happened? 

[Mike B 625]

1 hour ago, Skye said:

Mike B, it's been a year! What happened? 

Here is my 13 month update. Still learning, but have improved a lot. I have had to adjust my goals slightly but still on track to make this my career after the military.

 

[Michael McCausland 6]

I have just started.  This is an important topic.  In the sim now.  My first week...just stumbled around and was up $1000...then last week came...reality check.  I will stay in the sim and keep working it.  I am a retired teacher...but not over the hill.

[Mike B 625]

5 hours ago, Michael McCausland said:

I have just started.  This is an important topic.  In the sim now.  My first week...just stumbled around and was up $1000...then last week came...reality check.  I will stay in the sim and keep working it.  I am a retired teacher...but not over the hill.

Trade everything in the beginning to find out what you can recognize. Do not worry about P/L now. Once you find out what you are good at, than come up with a solid business, trading, and risk plan.

[Brendon 146]

You just don't quit. 

[Mike B 625]

8 minutes ago, Brendon said:

You just don't quit. 

Great answer

 

[Jason H. 56]

I love how this thread popped up again just recently, it's great timing for me. Almost exactly two years ago I started trading, lost my job, closed my accounts, found a new job, had a flood, bought a new home, paid off all my debts... It's been a crazy two years. 

This morning I fired up my renewed DAS subscription for the first time in two years. I made $100 in sim 🙂

I never quit. I took a long break, and while I didn't want to, I needed to. Learning to trade is stressful. I wasn't out of work that long and I probably could have kept my account open and let my debt sit for a while to keep going, but I knew that it was cause me way more stress on top of the stress of trading. Because of that hard decision I'm now in a much better financial and mental place to go back. My account is funded double what it was before, I have no debt, savings, and a stable Work-from-home job, which allows me to trade most mornings and transition right to work. 

When to quit trading? For me the answer is "never" because I love it, I want to get better at it, and eventually I want it to be all I do. For others that answer might be different, but if you're in it for the right reasons then my response is the same: Never. You just have to keep asking yourself:

"what do I need to change to succeed?"

[Brendon 146]

Exactly Jason, I agree that a trader never should keep repeating mistakes. It's ridiculous how many times it took me to learn to accept a loss and stop out. But once I kept seeing that is the ONLY way to trade, you just do it and never look back. You can be wrong half the time with your trades, but those times you are correct, usually your R/R will be greater than 1:1 so statistically you WILL make money. Can you live off that is another story, currently I treat it as supplemental income. Also your time in the chair will increase your call outs and setup accuracy where you can only get better and reading the market. Imagine an accuracy of 2/3 trades correct with R:Rs greater than 1...  

[Mike B 625]

On 12/20/2019 at 10:33 AM, Jason H. said:

"what do I need to change to succeed?"

Could not agree more, focus on fixing one thing, then move on to the next. Eventually your code will be fixed and you will be trading consistently.  

[Cees van der Heide 0]

Maybe I can get some new life in this topic haha, not sure if this is the right topic for it but oh well!

 I'm struggling hopelessly with overtrading on days that are quite silent. I mostly trade with the trends so reversals aren't my thing, mostly I am looking for ABCD patterns and Opening Range Breakouts. Today was a day that the SPY only showed a relative volume of about 40%, little stocks where showing opportunities for me. Instead of then accepting that fact and closing off  early or either waiting for really good setups, I take trades that are absolutely way outside my tradebook and I end the day with a max loss. 

I never had trouble with taking my stop losses at the right time, I'll never let a trade go against me. I also always adhere to my rule that I cannot lose more than 3R on any given day (excluding accidental slippage or fees). I also have a 3 strikes and you're out rule, meaning that when I take 3 losses in a row, I have to call it a day and shut down my computer. These rules are helping me a lot but the problem I'm experiencing is that a red day is literally always a max loss day, I never have a day where I lose just 1R or something like that. Whenever I'm already red during the day I become sloppier and sloppier with my trades and when I'm green I don't. I just cannot accept walking away red and I have to give it a shot to get back to green, even though the setup is bad. 

Today was such a day, I hit my 3 strikes rule and I ended the day -2.7R. The first trade I took was perfect but it stopped me out, no big deal. But in my head it is a big deal and I'm red which I cannot accept. I then proceed to take 2 more trades in which I broke a total of 5 rules out of my tradebook, just because I have to get green which obviously rarely ever works.

Does anybody else experience something similar? And if so, how do you deal with this?

I suppose it is something I'll never really get rid off, but just something I have to be aware of and deal with.

Trade safe guys and thanks a lot already

[Michael McCausland 6]

I just read trading in the Zone and then viewed the videos that Carlos had mentioned when he covered for Andrew that day....  The one thing that stuck out on me was the idea that if you look at your curve and you have decent consistent green days and then you have a catastrophic loss day...you are struggling with not accepting the risk.  Your rules are good but you, like me, can't accept the red day.  The fact is that there will always be red days if we accept the risk.  If we don't accept the risk...we will insist on going green at any cost and there is the disaster.  I took a red day in the past two weeks and I did it because if I didn't accept it...it would upset my psyche for future trading.  So far...so good.  I am still learning as well.

[Cees van der Heide 0]

On 6/4/2021 at 1:53 AM, Michael McCausland said:

I just read trading in the Zone and then viewed the videos that Carlos had mentioned when he covered for Andrew that day....  The one thing that stuck out on me was the idea that if you look at your curve and you have decent consistent green days and then you have a catastrophic loss day...you are struggling with not accepting the risk.  Your rules are good but you, like me, can't accept the red day.  The fact is that there will always be red days if we accept the risk.  If we don't accept the risk...we will insist on going green at any cost and there is the disaster.  I took a red day in the past two weeks and I did it because if I didn't accept it...it would upset my psyche for future trading.  So far...so good.  I am still learning as well.

Thanks for your reply. 

I'm always finding myself in either a negative or positive spiral. The prolem with the negative spiral is that I want to break through it, no matter what. I start taking sloppier trades in an attempt to get back what I lost, even though there is nothing to get back. A loss is a loss and the next trade is independent of the one before, even though it doesn't feel like it.

Accepting red days is crucial, and even more so moving on from it. Trying to consider every day like a new chance starting from 0. Easier said than done but definitely the truth. Currently I'm not really suffering from having 1 day that destroys it all, but more in that I want to break the negative spiral so badly I take sloppier trades which worsens the spirla and I keep losing and losing. Not sure how to break through it but I'll continue trying